Friday, April 26, 2013

US and Guatemala Settle Labor Dispute under CAFTA-DR

As previously reported here, in 2010, the United States filed its first ever dispute settlement proceeding under the U.S.-Central American- Dominican Republic Free Trade Agreement (CAFTA-DR) against Guatemala.  The dispute involved concerns the United States had regarding Guatemala's commitment to enforcement of its labor laws, especially Guatemala's failure to provide adequate protection from violence for labor leaders.

Article 16.2 of CAFTA-DR requires each party to effectively enforce its labor laws. The United States alleged that Guatemala violated Article 16 by failing to effectively enforce Guatemalan labor laws relating to the right of association, the right to organize and bargain collectively, and acceptable conditions of work. The United States claimed that the failure to properly enforce labor laws in Guatemala creates an unfair playing field that harms U.S. workers.

As required under CAFTA-DR rules, the parties began a consultation process.  When the matter was not resolved within a reasonable time, the United States requested the establishment of a Chapter 20 dispute settlement panel to consider the matter in 2011.  Panelists were appointed in the summer of 2012.

Last week, the United States and Guatemala announced a settlement of the matter by way of an 18-point agreement that includes specific actions and time frames for Guatemala to improve its labor law enforcement.  Under the agreement, Guatemala is expected to strengthen labor inspections, expedite and streamline the process of sanctioning employers for violations, take steps to increase labor law compliance by exporting companies, improve the monitoring and enforcement of labor court orders, bring more transparency by publishing labor law enforcement information and establish mechanisms to ensure workers receive proper severance pay.


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